I inherited mineral rights in Payne county. As I am just about to sign a new lease agreement, I would like to know the general going rates for lease and royalties.
it's identified as Lot 3 & NE/4 NW/4 & W2 NW/4,
Section 35 Township 19N, Range 5E
I was offered 5 year paid up rental for 175 (x18.625) and 3/16 royalty. Is this a fair going rate?Thanks so much for your time.
Five years is too long for a lease it should be 3 years. Companies are just starting to lease in Payne County again. It's just my opinion but I think that the rates will increase in the next 6 to 12 months. I would wait.
Bob is right. 5 years is way too long and $175 is way to low. Also, I'd try to get 1/4th royalty. You may get several wells in your section and the 1/4th really adds up over time. We will definitely see higher oil prices a year from now if not sooner. Iran will have to cut production when US places new sanctions on them for firing the nuclear test missile and US and Saudis have cut some production and have a recent agreement to decrease more.
Dear Bob and Martha, Thank you so much for your replies!!! What approximately (ballpark) do you think I should expect/request per acre? (I'm in the midst of correspondence with Centennial.)
A 5 year lease is not good at all. The current standard is 3 years. $175 is way to low, so I'd raise it to $500 and try to get 1/4 instead of 3/16th. Oil prices are gong up, so you may have to wait a little longer to get the bonus and terms you want. Also, you need to examine the lease's wording and make sure you know what you are signing. This forum can help you.
Thank you. what's a bonus?
Tracy,
The $175 you were offered is called the cash bonus or bonus for short. It's a cash payment paid to you for the execution of your lease. Friend me and I'll send you some information on leasing.
Tracy, I have a meeting to go to, so here's a oil and gas lease primer for you to read. I hope it helps. Get back to this forum if you have questions. Your lease wording is very important. http://jay.law.ou.edu/faculty/Hampton/Mineral%20Title%20Examination/Spring%202012/The%20Oil%20and%20Gas%20Lease%20In%20Oklahoma_Ryan%20Ray.pdf
Tha
I have found that I can receive a 25% no bonus royalty in Payne County. If you would rather have the bonus money, then you should get a 3/16 or 20% royalty. If you get a decent well, the extra royalty can be worth it over time. You have to decide have much risk you want to take. You should also strike the provision in the lease allowing the operator to deduct "owner deducts", usually for gas, not oil. I thought that I did this, but discovered that I did not. The monthly deduction is more than the combined total for severance taxes and Oklahoma withholding taxes. Very maddening. I agree that you don't want to sign a five year lease. I also delete the language providing for an automatic renewal. I figure that they can come back to me in three years if they want another lease. You will also notice that the State requires the purchaser to withhold Oklahoma income tax. You can get this back the next year when filing your returns if you do not live in Oklahoma. Make sure you give them a bank account number to deposit your refund, otherwise you will receive a debit card. Huge nuisance. Charlie Hoke, Wichita, Kansas.